'The reforms fundamentally shift the taxation landscape'

The Herald Scotland

8 hours ago

The alterations elicited a particularly angry response from the farming community, which has been taking to the streets in tractors around the UK to make its feelings known. The changes mean relief will now only apply to the first £1 million of qualifying assets, with the remainder taxed at an effective rate of 20%.
However a new survey commissioned by Brodies has revealed a 'widespread lack of understanding' about the forthcoming changes, with just 26% stating that they 'fully grasp the implications'. According to Brodies, which commissioned YouGov to survey 2,001 UK adults aged 50+, the findings signal a pressing need for law firms, tax advisers, and estate planners to proactively educate and support clients navigating the transition.
While the survey found that 54% of respondents are aware of the IHT reforms, they remain unclear on the personal impact, which could leave them vulnerable to missed planning opportunities, Brodies noted. Fewer than half (41%) have a structured estate plan in place, while 35% acknowledge that they should plan but have not begun the process. In addition, the survey found that only 16% have sought professional guidance, despite the complexity of phased tax relief reductions and domicile rule shifts.
'These reforms fundamentally shift the taxation landscape for estates, businesses, and trusts,' said Mark Stewart, partner at Brodies.
'There is a clear knowledge gap among those impacted, underscoring the vital role of legal, tax and wealth professionals in guiding clients through structured succession planning.'
Brodies noted that the findings of the survey underline the 'urgent need' for 'proactive dialogue' between clients and their professional advisers, with only 10% of respondents found to have engaged in detailed discussions about inheritance with their families.
Fairness and the risk of dispute were highlighted as the leading concerns of respondents – 28% cited equitable distribution as a key issue, and 23% said they fear conflict due to wealth transfer. Brodies cautioned that without 'robust' estate planning and professional advice, families risk contentious probate litigation, unnecessary tax exposure, and uncertainty over asset protection strategies.
'Professional advisors must take a leadership role in informing clients,' Mr Stewart added. 'From succession structuring to navigating relief restrictions, we must ensure clients understand their tax position and the long-term consequences of inaction.'
Concerns over the changes to inheritance tax planning have been expressed within the Scottish business community.
Maxi Caledonian, the Irvine-based haulage specialist owned by industry veteran Gerry Atkinson, told The Herald in June that the changes will deny businesses the capital that is 'necessary for stability and continued growth'.
Maxi said: 'Whilst we normally avoid such comments, we consider that the current Government's proposed heavy taxation of privately owned companies upon the death of shareholders removes planned essential business capital necessary for stability and continued growth and will adversely affect many private companies and associated employment increases.
'This appears to be the opposite of what the Government is claiming their primary objective is - namely to grow the economy - and successful expansion of private companies must be a major contributor to achieve this objective.'
Farming chiefs say the changes will affect up to 70,000 farms but the UK Government insists the figure is much lower, with the Treasury stating that it expects around 500 estates to be impacted. A report published by CBI Economics has found that the reforms could threaten over 200,000 jobs and cut almost £15 billion in economic activity by the end of this Parliament.